SEC Proposes Framework for Crypto Projects to Raise Up to $75 Million
The US Securities and Exchange Commission (SEC) has proposed a path for crypto projects to raise up to $75 million under new rules.
The proposal, called Regulation Crypto Assets, aims to cover the fundraising process from start to finish and provide clarity on how to separate the token from the investment contract.
Under the current system, buyers invest in a project with the promise of future returns, but regulators have struggled to determine when that investment becomes a security. The SEC's proposal would establish three new lanes for fundraising: a startup exemption, Tier 1, and Tier 2.
The startup exemption allows individual or informal groups to raise up to $5 million over four years without the need for financial statements. Tier 1 permits US entities to raise up to $20 million with unaudited financial statements, while Tier 2 allows for up to $75 million with audited statements.
The proposal also includes new forms and reporting requirements to keep investors informed about project progress and ensure that the investment contract is properly terminated once the issuer has completed its work or permanently ceased efforts.